On deck for Barclays is the spotlight once again. The UK’s financial regulator, the Financial Conduct Authority, or FCA, has punished the bank with billions in fines for massive failures to control financial crime risks. The Financial Conduct Authority (FCA) hit the bank with a record £42 million fine. This penalty was largely due to the bank’s lack of robust, ongoing due diligence or monitoring of its account with Stunt & Co. This account was central to a huge money laundering enterprise. It allowed Fowler Oldfield to funnel £46.8 million over a little more than a year.
The FCA’s investigation into Barclays highlighted that the bank only initiated a review of its exposure to Fowler Oldfield after it learned of the FCA’s decision to prosecute NatWest regarding similar concerns. This lack of proactive oversight has proven disastrous for Barclays. The bank’s disregard for compliance has resulted in numerous pay-to-play penalties over the years.
In mid-2022, Barclays was fined £783,800 for supervisory failures relating to Premier FX, a payments company that went bust. Further lapses resulted in a £72 million fine for the bank in 2015. This penalty was imposed due to its deficiencies in addressing financial crime risks posed by ultra-wealthy clients. Time and again, these violations show that Barclays has a pattern and practice of failing to prevent financial crime risks.
This why the recent record fine of £42 million is so exceptional. Significantly, £39.3 million of this sum is directly as a result of faults with Stunt & Co – the original contractor. Barclays has worked to reduce the impact of these penalties through full cooperation with the FCA. The bank got a $338 million break on its fine. This was the outcome of its deep cooperation during the investigation of WealthTek, another participant in the financial malpractice.
“As acknowledged by the FCA, Barclays undertook an extensive review and self-reported its findings to the FCA,” – Barclays
Barclays pre-empted this punishment by making a voluntary payment to the affected clients during the WealthTek investigation. This action is a clear indicator of their resolve to right past wrongs. In response to the latest fine, a representative from Barclays stated, “We remain deeply committed to the fight against financial crime and fraud.”
Nevertheless, even with these assurances in place the FCA highlighted that it was Barclays’ failures which resulted in significant failures in oversight and adherence to compliance. Our inquiry into Stunt & Co was based on their past record for laundering money. It found that the bank had not directly committed any money laundering violations itself.
“Had it done so, it would have seen that WealthTek was not permitted by the FCA to hold client money,” – FCA
Barclays is meeting these challenges directly. Third, it will need to continue to reinforce its financial crime risk management frameworks and be diligent in rebuilding trust with regulators and with its clients. The bank’s capacity and willingness to learn from past mistakes and put in place stringent safeguards will be decisive in ensuring that such flagrant lapses don’t happen again.
